Distributive policy

Bank of Thailand raises policy rate by 0.25%, from 0.75 to 1%

Reacting to the current inflationary trends and the depreciation of the baht, the Bank of Thailand raised the key interest rate by 0.25% as widely expected.

The increase in rates by the Monetary Policy Committee (MPC) brings the key rate to 1% per annum. The central bank also indicated that it would gradually increase the key rate to adapt to the economic expansion.

The Committee believes that a gradual normalization of monetary policy remains an appropriate path for monetary policy and therefore votes to increase the key interest rate by 0.25 percentage points at this meeting.

Monetary Policy Committee Decision 5/2022 (bot.or.th)

Thailand’s economy is expected to grow 3.3% in 2022

Thailand’s economy is expected to continue growing at 3.3% in 2022 and 3.8% in 2023, driven mainly by tourism and private consumption. The tourism sector is recovering faster than expected as the number of foreign tourists continues to rise. Furthermore, the economic recovery has become widespread, both in terms of sectors of activity, particularly services, and in terms of income distribution.

Meanwhile, the slower-than-expected global economy is impacting Thai exports but would not derail the overall economic recovery.

Headline inflation expected at 6.3% in 202

Headline inflation is expected to stand at 6.3% in 2022 before declining to 2.6% in 2023 due to the fall in global oil prices and the gradual easing of supply chain bottlenecks. ‘supply. Core inflation is expected to stand at 2.6% in 2022 and 2.4% in 2023, rising more than expected, mainly due to higher cost pass-through.

Government bond yields have gradually risen, while overall funding costs remain supportive of corporate funding.

Rapid depreciation of the baht against the US dollar

Within the framework of monetary policy aimed at maintaining price stability, supporting sustainable and full-potential economic growth and safeguarding financial stability, the Committee believes that the Thai economy will continue to recover but with downside risks. increased inflation.

Monetary Policy Committee Decision 5/2022 (bot.or.th)

The depreciation of the baht against the US dollar has been rapid and continuous due to the strengthening of the US dollar, but remains in line with regional currencies. The Committee will continue to closely monitor developments in financial markets and exchange rates, particularly in times of heightened volatility.